Iraq, after eight years of occupation by American troops, is
luring US hotel operators and developers betting on growth from business
expansion and an eventual pickup in leisure travel to the war-torn region.
Best Western International Inc plans two hotels under its
Premier brand in Erbil, Iraq’s fourth-largest city and the capital of Iraqi
Kurdistan in the northern part of the country. Marriott International Inc.
expects to operate two properties in the city. Hilton Worldwide, owned by
Blackstone Group, is planning a 200-room Hilton DoubleTree Suites in Erbil.
The hotel companies are following growth in Iraq by
businesses including General Electric Co. and Exxon Mobil Corp. as the US
prepares to withdraw its remaining troops by the end of the year. The Kurdistan
region, in particular, is attractive for hospitality projects because of its
relative safety and decades of neglect under Saddam Hussein’s regime, said
Stephen Lari, principal at New York-based Claremont Group, which is spending
$32m to develop Erbil’s Hilton DoubleTree.
“We were drawn to the region due to its stable and
functioning regional government, a desire for American investment, a safe
security environment, strong economic growth and an ever-more sophisticated and
prosperous populace,” Lari said in an e-mail. It also has “a strong and
favorable investment law, and an enormous pent-up demand for residential and
hospitality development,” he said.
Demand for lodging in Iraq probably will be limited to
business workers as kidnapping and terrorist violence remain concerns. The US
Department of State warns Americans against all but essential travel to the
country given “the dangerous security situation,” according to its website.
“Some regions within Iraq have experienced fewer violent
incidents than others in recent years, in particular the Iraqi Kurdistan
region,” the State Department said in a Sept 13 statement. “However, violence
and threats against US citizens persist and no region should be considered safe
from dangerous conditions.”
A possible lack of fresh water, electricity and
communications systems also can be obstacles to doing business in the country,
said Jan Freitag, senior vice president at Smith Travel Research Inc. Against
this backdrop, US hoteliers may benefit from increased demand from workers
seeking familiar brands, he said.
“Western hotels are
often seen as safe havens from the craziness outside their own four walls,”
said Freitag, based in Hendersonville, Tennessee. “Reporters, oil workers,
diplomats are willing to pay extra to sleep safely, work safely and - as
importantly - eat safe food. If the hotel can deliver, then it makes sense for
them to expand into high-risk areas.”
The State Department has pushed to get more US businesses
into Iraq. Secretary of State Hillary Clinton has mobilized her agency to help
companies like Boeing Co. and PepsiCo Inc. to compete there by focusing on
building economic links, Robert Hormats, the State Department’s under secretary
for Economic Affairs, said in a July interview.
Article continues on